Even after contributing a large majority of total manufacturing employment in India, the unorganised sector is deprived of the efficiency gains. In this light analyse the performance and challenges of unorganised sector in comparison to organised sector. What could be the way-out?
In World Bank’s ease of doing business report, India’s rank is improving each year. Government took several steps to enhance the business environment in country which include promoting manufacturing under Make in India, labour reforms, e-biz platform, ease in rules for FDI in various sectors, easy paying of taxes, electronic system for paying employee state insurance contributions, electronic filing of integrated customs declarations, the Companies (Amendment) Act, passage of the commercial courts and the Insolvency and Bankruptcy Code for faster exit from non-viable businesses. In spite of all these efforts there is no significant gain in the ranking, thus the factors which needed focused attention to gain a substantial improvement are as follows:
Old retrospective tax demands linger, while new instances (pertaining to bonus payments and mining royalties) are being battled in the courts. This need clarity from the government based on specified rules.
India has maintained status quo in its ranks in parameters of starting a business and registering property. Cumbersome process to avail the incentives under start-up India scheme need to simplify.
Most of the banks are in public sector reeling under NPAs are avoiding any further risk thus credit growth is suffered. Policy rate cut by RBI is not transmitting to the market. Recapitalisation of bank is required and Bank Board Bureau need to act fast to resolve the NPA issue from balance sheets of Banks.
Land acquisition is still a challenge as high rates make many projects unviable and EIA is suffering from discretion. This need significant political will to amend some parts of the Act.
As it was announced that the government had no business being in business, little progress has been made on this front. Government should consider the disinvestment at priority in public sector organisations and take tough decision for loss making ones.
GST need to be implemented through consensus based provisions.
Under Insolvency and Bankruptcy code timeline to resolve the disputes need to be adhered.
It is hoped that many reforms like Insolvency and Bankruptcy code, GST and online filing and payment of returns at the Employee Provident Fund Organisation which were not considered in this ranking will improve the ranking of India in next report significantly, however, India need to make significant stride as the competition at global level is increasing at rapid pace. World’s ten best improvers include Pakistan, Kazakhstan, Serbia, Kenya and Indonesia can pose significant challenge for India.